BATTLE OF TAX

Rotorua Morning Post, Volume 2, Issue 439, 25 January 1933, Page 7

BATTLE OF TAX

COMMONAVTALTH AND STATE INTERESTS AT VARIANCE. TROUBLE LOOMING Sydney, Saturday. Verbal fireworks are likely at the next Premiers' Conferenee if the repa'esentatives of the various States sueceed in raising the question whether the Commonwealth should at once evacuate entirely speeified fields of taxation and leave them to the States. Taxpayei's have a vital concern in the outcome of the argument, because upon it largely depends their prospect of early tax reduction. The States claim that it is not fair to them • that the Commonv/ealth should be making all-round tax revision while ] they have to borrow money to bridge [ their deficits. In particular the States | are likely to eoneentrate on Federal I abandonments of probate, which last j year brought in £1,350,000 to the j Commonwealth colfers, and enterI tainment tax, which' netted £133,000. State Dehcits. | For some time State Treasurers, I struggling to keep their deficits withI in manageable proportions, have been casting envious glances at the grow- | ing Federal surplus. At the present ! rate, and unless further tax cuts are made, the surplus may reach nearly I £4,000,000 by June 30. The ComI monwealth accounts for the half-year ended December 31 show a surplus of j £3,208,000. The progressive improve- [ ment in Federal finances is shown by comparison of the latest figures with j those for the last two years. For the j first 6 months of 1930-31 there was a I deficit of £9,500,000, and for the first six months of last year there was a ficit of £1,231,000. The position now is that, exceeding the Government's most optimistic antieipation, the surplus for the first six months is practically large enough to cover the special grant to wheat growers, the | grant to farmers for fertilisers, and | the tax remissions which have already S been made. The marlced improvement j is largely due to buoyant Customs revenue. In the six months ended DeI cember 31 Customs and excise pro- ! duced £17,291,000, eompared with | £14,402,000 during the first six months | of last year. Similarly saies tax re- | venue, despite the increased exempI tions, is nearly £1,000,000 more than i it was at December 31, 1931. Commonwealth Fields. j In 'splte of this, it is considered | that there is little possibility that the I Commonwealth Government will consider for one minute the evacuation j of fields of taxation once regarded as | exclusively within the taxation sphere j of the States. Abandonment by the Commonwealth of the income tax and land tax fields is hardly within the i sphere of practical politics, but the surrendel' of probate duties and entertainment tax would relieve the financial position of the States to the extent of nearly £1,500,000 on last year's figures. Encroachment on the Commonwealth into the State taxation fields has been a marked f ea ture of Federal policy since the war, and the effect has been to( diminish seriously the ability of the States to balance their budgets. The view of the Commonwealth Government is that the present buoyant revenue cannot be regarded as permanent, and the Commonwealth Government already has surendered by tax remissions as much revenue as the finaneial position warrants.